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Shale pioneer sees U.S. fracing from sea to shining sea

ISAAC ARNSDORF

FORT WORTH, Texas (Bloomberg) -- Where others see purple mountain majesties, Kent Bowker sees buried treasure. The 58-year-old geologist was part of a team that first extracted significant amounts of gas from a dense rock formation near Fort Worth, Texas, in the late 1990s. Now Bowker says he’s identified a sweet spot in the Rocky Mountains that, along with untapped shale in California, will add to output from Pennsylvania to Texas that’s already propelled the U.S. to No. 1 in the world for combined oil and gas production.

It’s time for the shale revolution to push west, Bowker said. Pressed to reveal a more specific location for his “super-secret” potential bonanza, Bowker joked, “Is this guy a landman?”

“We know where we can drill thousands and thousands and thousands of additional wells,” Bowker said. “I don’t think we need another gigantic breakthrough. I don’t think that’s necessary to keep the ball rolling in the shale plays.”

Bowker’s vision of drilling from sea to shining sea might need to become a reality for the U.S. to achieve energy self-sufficiency, which BP Plc says could happen by 2035. The industry is straining to keep up the pace because production in shale wells declines quickly.

Even tougher to overcome might be political headwinds. Fracing has been banned by some towns. A proposed ballot measure in Colorado would prohibit the practice.

Bowker has proved naysayers wrong before. As a geologist at Chevron Corp. in the 1990s, he calculated that Texas’s Barnett shale held more natural gas than the government and other companies estimated. Bowker shrugged off the doubts of colleagues convinced that the dense rock could never be drilled.

He joined Mitchell Energy & Development Corp., the company leasing land in the area, in 1998 and was part of the team that first used horizontal drilling and hydraulic fracturing to extract significant gas supplies from shale by 2001.

Other companies adopted Mitchell’s techniques, pushing gas production to new highs in each of the past eight years. The U.S. overtook Russia and Saudi Arabia as the largest combined producer of oil and gas last year, the Energy Department estimated.

Now Bowker heads Houston-based Bowker Petroleum LLC.

“I enjoyed making fun of people that pooh-poohed, even when I was at Chevron, that there was anything left in the U.S.,” Bowker said. “That was back in ’92.”

As producers try to extend gains, they face wells that deplete faster than conventional production. When new drilling stops, gas output drops by about 50% in about three years, according to the International Energy Agency.

The decline rates for oil are even steeper. Shale production drops more than 80% in four years, more than three times faster than a conventional well, the IEA estimates. The Paris-based organization expects U.S. output to peak in 2025.

Oil production growth from shale will slow to 5% in five years from 56% last year, Steven Farris, the chairman and CEO of Houston-based Apache Corp., said in an April 29 presentation. Capital spending must increase and new basins must be discovered, he said.

The declines are over-dramatized because the wells are so productive to begin with, according to Bowker. Companies can re-frac old wells to re-stimulate production, such as in the Barnett formation, where it all began, he said.

“It’s not as drastic as what people think,” Bowker said. “You listen to all the naysayers saying we’re running out of oil, we’re running out of gas, there’s not going to be anything left. We’re always running out of oil, we’re always running out of gas. But obviously that’s not the case.”

EOG Resources Inc., the Houston-based company that helped discover Texas’s productive Eagle Ford formation and is known for quietly buying acreage to drill, said May 5 that its land in the DJ and Powder River basins in Colorado and Wyoming may hold the equivalent of 400 MMbbl of oil.

“There is still plenty of room to grow, especially in the West,” Bowker said.

Developing those regions will have to overcome political lobbying. Billionaire environmentalist Tom Steyer, founder and former CEO of San Francisco-based investment manager Farallon Capital Management LLC, is pushing California to tax oil output and require two-thirds of a county’s voters to approve fracing before companies can use the controversial technology.

05/08/2014

 

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